Voices

Home ownership is a lifestyle choice

Tan Si An

Between the dichotomous desires of asset appreciation for existing homeowners and affordable housing for first-timers, the choice, announced at the National Day Rally, is to slice this Gordian knot by promising price stability for Build-To-Order flats via more subsidies.

The belief in home ownership as a fundamental principle for Singapore has remained unchanged.

Singapore, however, has changed much since the 1960s.

Citizens no longer live in slums and squatter settlements; home ownership rates now stand at 90 per cent instead of 9 per cent.

Nearly every family here now has a home. But with geographical limits on the numbers of new flats that can be built, and the budgetary constraints to the amount of subsidies that can be given, is it then realistic for every new nuclear family to expect a new flat?

This may encourage overconsumption of valuable resources and create a potential fiscal liability for future generations. Already, the Prime Minister hinted at a future tax hike in an increasingly tax competitive world.

In the book, Fault Lines: How Hidden Fractures Still Threaten The World Economy, Professor Raghuram Rajan argues that promoting home ownership among those who could not afford it led to systemic imbalances, a possible cause of the 2008 financial crisis. There may be lessons here.

Former Minister Mentor Lee Kuan Yew once said: “No country in the world has given its citizens an asset as valuable as what we’ve given every family here.” Indeed, no country or city can afford this in the long run, and Singapore is no exception.

Giving such a valuable, appreciating asset to the people undermines the entrepreneurial, risk-taking spirit, since Singaporeans have more to lose instead of nothing to lose. In its stead, a rentier mentality takes root.

Whereas home ownership initially provided financial security and a sense of belonging, heavily subsidised flats now provide the means to property speculation after the minimum occupation period.